Problem With the New Chip Credit Cards

These new chips have done little to stamp out fraud

Those new security chips in your credit cards aren’t helping much in cutting down on credit card fraud, partly because thieves found other ways to steal and partly because not enough merchants are using the chips, says a new report issued this week.

The report, compiled by consulting firm Javelin Strategy & Research and identity-theft-protection firm LifeLock Inc., said nearly half of credit card fraud cases involving chip-enabled cards occurred at 64 percent of merchants who haven’t installed chip-enabled terminals. Overall, the number of identity theft victims rose 18 percent since 2015 — a number that represents 15.4 million people and losses totaling $16 billion.

Still, most fraud cases occurred online, where merchants still depend on card numbers, expiration dates and security codes. “Card-not-present” fraud, where thieves simply steal your numbers instead of your actual card, affected 3.4 percent of American consumers last year, up from 2.4 percent in 2015.
The new microchips have helped cut down the creation of fake cards, in which thieves who have your numbers simply imprint them on a new piece of plastic. The chips make that kind of counterfeiting hard to do.

But as quickly as merchants find ways to control
one kind of thievery, thieves invent ways to steal.

“Fraud is kind of like squeezing Jell-O,” said Stephen Coggeshall, chief analytics and science officer at LifeLock. “Stop it one place, and it migrates to somewhere else.”